In January last year, China initiated an anti-dumping investigation on imported cognac from the EU and announced 'temporary anti-dumping measures' in October, demanding cognac importers to pay a maximum deposit of 39% based on wholesale prices. If these measures become permanent, the deposits will be confiscated as tariffs. This action is considered a retaliatory response to France's push for the EU to start an anti-subsidy investigation into Chinese electric vehicles.

Currently, the deadline for the anti-dumping investigation on European cognac by China is set for July 5. If no agreement is reached by then, China may permanently implement the maximum temporary tariff of 39%. French cognac producers have reached a preliminary agreement on minimum import prices, which will be 'much better' than continuing to pay the existing tariffs.

At a briefing held on June 12, a lawyer for the French National Cognac Industry Bureau detailed the minimum import prices as part of a provisional agreement reached after lengthy technical negotiations. According to the document, the minimum import price for VS cognac is 46 yuan (approximately $6.39) per liter, while the price for XO is 424 yuan per liter. Sources indicated that the minimum import prices for well-known brands like Hennessy, Martell, and Rémy Martin will be higher than those for smaller producers, but still significantly lower than current levels.

The French government declined to comment on the price, claiming it is a confidential matter. A French government source told Reuters that Chinese officials have continuously linked cognac and electric vehicles; while the French government denies a connection, it remains cautiously optimistic about reaching a formal agreement before the July 5 deadline. A figure familiar with China-EU trade negotiations also confirmed that China has linked the signing of the cognac agreement with negotiations on electric vehicles.

Cognac producers in France have complained that they have become collateral victims in the trade dispute between Brussels and Beijing after France publicly supported tariffs on Chinese electric vehicles. After China announced the 'temporary anti-dumping measures' in October, the stock prices of Rémy Cointreau and Pernod Ricard fell by 35% and 33%, respectively. According to the French National Cognac Industry Bureau, cognac exports to China have decreased by up to 70% due to the trade dispute.

Sources revealed that Beijing hopes the EU will replace the import tariffs on Chinese electric vehicles with commitments similar to the minimum prices for cognac. China has stated that negotiations regarding electric vehicles with the EU are in the final stages, but EU officials indicate limited progress. EU leaders are set to attend a summit in Beijing on July 24-25 to celebrate the 50th anniversary of diplomatic relations between China and the EU, with trade expected to be a priority issue.